We continue working for Peloton. Because the bikes have been so popular in COVID, we have asked to take a deeper look into the financial numbers.

We know that a bike sells for $2,000, but we dont know the variable and fixed cost mix.

4: High-Low Method: Using the High-Low Method, calculate the variable cost and the total fixed cost:

Month Units Produced Total Cost

January 100 $620,000

February 80 $596,000

March 150 $680,000

April 170 $704,000

5: Using what we calculated above, now calculate the Contribution Margin per Unit

6: .Using what we calculated above, now calculate the Break Even Point in Units

7: .Using what we calculated above, now calculate the Contribution Margin Ratio

8: .Using what we calculated above, now calculate the Break Even Point in Dollars